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Stamford, Conn., February 26, 2020

Gartner Survey Shows 70% of Supply Chain Leaders Plan to Invest in the Circular Economy

Only a Minority Link Their Digital and Circular Economy Strategies

Seventy percent of supply chain leaders are planning to invest in the circular economy in the next 18 months, according to a recent survey by Gartner, Inc. However, only 12% of those have linked their digital and circular economy strategies so far.

Gartner defines the circular economy as an economic model that separates the ability to achieve economic growth from the consumption of natural resources. Those business models encourage continuous reuse of materials to minimize waste and the demand for additional natural resource consumption. The circular economy starts with good design, with end of life and raw material reuse in mind.

“The circular economy creates an ecosystem of materials,” said Sarah Watt, senior director analyst with the Gartner Supply Chain practice. “What was previously viewed as waste now has value. However, those ecosystems are complex and include many interdependencies and feedback loops. Digital technology has the potential to provide visibility and enable improved decision making when it comes to raw materials and services. Already, 35% of companies believe that digital technology will be a key enabler for their circular economy strategies, but very few are leveraging the technology for this purpose yet."

Gartner’s Future of Supply Chain Survey gathered data from 1,374 respondents responsible for supply chain and related function across a broad range of industries including high-tech, healthcare, retail and logistics.

Digital Technology in the Supply Chain

There is not a single technology that will enable organizations to move toward the circular economy. Rather, several combinations can lead to this outcome. The survey results show that organizations focus on four key technologies to advance their circular economy activities: advanced analytics, 3D printing, the Internet of Things (IoT) and machine learning (ML) (see Figure 1). 

Figure 1: Digital Technologies Used to Enable Circular Economy Activities

Source: Gartner (February 2020)

“It’s interesting to see that only few organizations are currently using blockchain. However, 38% of respondents are planning to explore the use of blockchain for the circular economy in the next five years,” Ms. Watt continued. “For example, the technology canbe used to give materials a single digital identity and to enable trade and pay-per-use. Although we are yet to see scaled use cases of blockchain for the circular economy.”

Applying Technology to Enable a Circular Economy

The top four areas of the supply chain where digital technology is being applied are: delivery (46%), customer engagement (45%), manufacturing and remanufacturing (43%) and planning (43%). Only 27% of respondents are currently using digital technologies to improve reverse logistics, but 39% plan to do so within the next two years.

“The difference in emphasis between delivery and reverse logistics is intriguing,” Ms. Watt said. “On the one hand, we observe organizations using technology such as analytics and alternative vehicles to optimize their routes and reduce emissions. You can argue that those actions should be considered a sustainable practice rather than one that enables the outcomes of the circular economy.”

“On the other hand, reclaiming materials at the end of life requires reverse logistics for pickup and return to either the organization or a third party. Our results show that, in the next two years, reverse logistics will garner the most attention. This indicates that companies are looking at how to take back products for reuse, refurbishment or recycling – an important step on the way to the circular economy.”

Gartner clients can find more information in "Employ Digital Technology to Enable a Circular Economy".

About the Gartner Supply Chain Practice

The Gartner Supply Chain Practice brings together the most relevant analysis, peer-based best practices, metrics and data across Gartner and offers supply chain leaders a platform to make the choices that will drive their business forward.

Additional information is available at https://www.gartner.com/en/supply-chain. Follow news and update from the Gartner Supply Chain Practice on Twitter and LinkedIn using #GartnerSC.

About Gartner Supply Chain Symposium/Xpo

Gartner Supply Chain Symposium/Xpo is the most important gathering of CSCOs and supply chain executives. Supply chain leaders will gather to gain a strategic view of the trends disrupting their business and the insights and frameworks they can use to build agility and robustness into systems, processes and decision making.

Upcoming dates and locations for Gartner Supply Chain Symposium/Xpo include:

May 11-14: Orlando, FL
June 15-18: Barcelona, Spain

About Gartner

Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and an objective resource for more than 14,000 enterprises in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

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